Phusion Projects to Pay $400,000 Over Allegations of Deceptive Marketing

BOSTON — A company best known for its alcoholic beverage, Four Loko, has agreed to pay $400,000 in a multistate settlement over allegations that it unlawfully marketed its flavored malt beverages, promoted the misuse of alcohol by underage individuals, and failed to disclose the effects of drinking alcoholic beverages combined with caffeine, Attorney General Martha Coakley announced today. As part of the settlement, Four Loko has also agreed to make significant changes to how it markets and promotes its flavored malt beverages and other alcoholic products.

“Binge drinking and underage drinking are public health concerns, and it is essential that companies market their products responsibly, particularly when they are selling alcoholic products that may appeal to minors,” AG Coakley. “We are pleased that the company will improve the marketing and promotion of its flavored malt beverages to prevent dangerous drinking behaviors.”

In an effort to curb the health and safety risks of excessive alcohol consumption, AG Coakley joined 19 other attorneys general and the City Attorney of San Francisco in pursuing changes to Phusion’s marketing and sales practices for its alcoholic products. The multistate effort reached an assurance of discontinuance with Phusion Products LLC, and its co-founders Jaisen Freeman, Christopher Hunter, and Jeffrey Wright. The agreement settles allegations that Phusion violated consumer protection and trade practice statutes in the marketing and sales of its flavored alcoholic beverages.

The settlement specifically addresses Phusion’s practice of manufacturing, marketing, and selling unsafe and adulterated caffeinated alcoholic beverages prior to the FDA’s November 2010 letter warning Phusion that caffeinated Four Loko is an unsafe product. As a result, Phusion ceased producing caffeinated alcoholic beverages, marketed as energy drinks, and removed its caffeinated Four Loko products from retail store shelves. Phusion later reintroduced the malt beverage without caffeine and other ingredients.

As part of the settlement, Phusion has agreed to reform how it markets and promotes its flavored malt beverages, including Four Loko. Phusion is also prohibited from:

  • Promoting the misuse of alcohol;
  • Promoting the mixing of flavored malt beverages with products containing caffeine;
  • Manufacturing, marketing, selling or distributing any caffeinated alcoholic beverages;
  • Providing to wholesalers, distributers, or retailers any promotional materials for caffeinated alcohol beverages or materials that promote mixing flavored malt beverages with products containing caffeine;
  • Selling, offering for sale, distributing or promoting alcoholic products to underage persons;
  • Hiring underage persons to promote alcoholic products;
  • Hiring models or actors for its promotional materials that are under the age of 25 or that appear to be under the age of 21;
  • Promoting flavored malt beverages on school or college property, except at retail establishments licensed to sell alcoholic products;
  • Using names, initials, logos, or mascots of any school, college, university, student organization, sorority, or fraternity in Phusion’s promotional materials for its alcohol products; or
  • Distributing, selling, providing or promoting merchandise bearing the brand name or logo of flavored malt beverages to underage persons.

As part of the settlement, Phusion has also agreed to remove any postings that depict the consumption of its caffeinated alcoholic beverages, condone the misuse of alcohol, and must advise retailers to display its flavored malt beverages separate from non-alcoholic products.

Other states that joined the settlement include Arizona, Connecticut, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Mississippi, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, and Washington, along with the City Attorney of San Francisco.

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